RADNOR, Pa.-- Penn Virginia Corporation (NYSE: PVA) today reported financial and operational results for the three months and year ended December 31, 2009 and provided an update of full-year 2010 guidance.
Fourth Quarter 2009 Highlights
Fourth quarter 2009 results, with comparisons to fourth quarter 2008 results, included the following:
-- Record proved reserves of 942 billion cubic feet of natural gas
equivalent (Bcfe) as of December 31, 2009, as compared to 916 Bcfe as of
December 31, 2008;
-- Quarterly oil and gas production of 11.3 billion cubic feet of natural
gas equivalent (Bcfe), or 123.1 million cubic feet of natural gas
equivalent (MMcfe) per day, as compared to 13.2 Bcfe, or 143.8 MMcfe per
day;
-- Operating cash flow, a non-GAAP (generally accepted accounting
principles) measure, of $74.4 million as compared to $95.7 million;
-- Operating income of $20.6 million, which included $11.1 million of
non-cash impairment charges, as compared to an operating loss of $31.9
million, which included $51.8 million of non-cash impairment charges;
-- Adjusted net loss attributable to PVA, a non-GAAP measure which excludes
the effects of the non-cash change in derivatives fair value,
impairments and gains or losses that affect comparability to the prior
year period, of $0.4 million, or $0.01 per diluted share, as compared to
adjusted net income of $10.7 million, or $0.26 per diluted share;
-- Net loss attributable to PVA of $5.4 million, or $0.12 per diluted
share, as compared to net loss attributable to PVA of $0.5 million, or
$0.01 per diluted share; and
-- Financial liquidity consisting of undrawn borrowing capacity and cash
balances at December 31, 2009, pro forma to include the net proceeds
from our January 2010 Gulf Coast divestiture,of approximately $410
million, as compared to approximately $150 million on December 31, 2008.
Reconciliations of non-GAAP financial measures to GAAP-based measures appear in the financial tables later in this release.
Management Comment
A. James Dearlove, President and Chief Executive Officer, said, "Compared to the prior year quarter, we experienced significant declines in commodity prices and a 14 percent decrease in oil and gas production resulting from our decision to suspend drilling during a large part of 2009. However, the fourth quarter of 2009 came in as expected and we believe we are well-positioned for growth in 2010 and beyond. As detailed in our separate operational update, fourth quarter production was at the high end of our expectations and we expect growth of six to 13 percent in 2010, pro forma the divestiture of our Gulf Coast assets. Due to the improved pricing environment and outlook for natural gas we have recommenced drilling and currently have six operated rigs running in our core plays.
"For 2010, we have hedged approximately 55 percent of our estimated natural gas production, at average floor and ceiling prices of $6.09 and $8.19 per MMBtu, respectively. During 2009 and through January 2010, we raised over $510 million from the issuances of debt and equity securities and the sale of non-core assets, including a portion of our position in PVG. As a result, we have substantially improved our financial liquidity, with $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand. We expect our strong hedge and liquidity positions to facilitate future growth in our focused, resource play-driven operations.
"In addition to our core oil and gas exploration and production business segment, we own 51 percent of Penn Virginia GP Holdings, L.P. (NYSE: PVG). PVG owns the general partner of Penn Virginia Resource Partners, L.P. (NYSE: PVR) and is PVR's largest limited partner unitholder. As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG. At current distribution rates, our ownership of PVG and PVR provides us approximately $30 million of annualized pre-tax cash flow."
Full-Year 2009 Consolidated Results
For the year ended December 31, 2009, operating cash flow was $280.5 million, as compared to $413.8 million in 2008. We incurred an operating loss of $98.2, which included charges of $127.7 million for impairments on assets held for sale, drilling rig standby charges and other impairments, as compared to operating income in 2008 of $256.8 million, which included charges of $51.8 million for impairments and $31.4 million of gains on the sale of assets. The adjusted net loss attributable to PVA, which excludes the effects of non-cash impairments, change in derivatives fair value, drilling rig standby charges and gains on the sale of assets, was $14.1 million, or $0.32 per diluted share, as compared to adjusted net income attributable to PVA of $85.5 million, or $2.03 per diluted share, in 2008. The net loss attributable to PVA was $114.6 million, or $2.62 per diluted shared, as compared to net income attributable to PVA of $121.1 million, or $2.87 per diluted share, in 2008 due primarily to the decrease in operating income. Oil and gas production increased nine percent to a record 51.0 Bcfe and proved reserves increased three percent to a record 942 Bcfe. At PVR, lessee coal production and natural gas midstream system throughput volumes were also fiscal year records for those segments.
Oil and Gas Segment Review
Fourth quarter oil and gas production decreased 14 percent to 11.3 Bcfe, or 123.1 MMcfe per day, from 13.2 Bcfe, or 143.8 MMcfe per day, in the fourth quarter of 2008, and nine percent from 12.4 Bcfe, or 134.9 MMcfe per day, in the third quarter of 2009. See our separate operational update news release dated February 4, 2010 for a more detailed discussion of operations for the oil and gas segment.
For the fourth quarter of 2009, the oil and gas segment operating loss of $8.0 million was a $16.5 million improvement over the operating loss of $24.5 million in the prior year quarter. Adjusting for a non-cash impairment charges (primarily on assets held for sale and subsequently divested) of $9.6 million in the fourth quarter of 2009 and a non-cash impairment charge of $20.0 million in the fourth quarter of 2008, operating income was $1.6 million, or $6.1 million greater than operating loss of $4.5 million in the prior year quarter. The increase in adjusted operating income was due to a $30.1 million decrease in non-cash exploration and depreciation, depletion and amortization (DD&A) expenses and a $3.0 million decrease in cash operating expenses, due to reduced drilling and production in the fourth quarter of 2009, partially offset by a $26.9 million decrease in total revenues. The 31 percent decrease in total revenues was primarily due to a $2.03 per thousand cubic feet (Mcf), or 32 percent, decrease in the natural gas price and the 14 percent production decrease, partially offset by a 41 percent increase in the oil price and a 36 percent increase in the price of natural gas liquids (NGLs).
In the fourth quarter of 2009, total oil and gas segment expenses, excluding the impairment and rig standby charges, decreased by $32.5 million, or 36 percent, to $57.9 million, or $5.11 per Mcfe produced, from $90.5 million, or $6.84 per Mcfe produced, in the fourth quarter of 2008, as discussed below:
-- Fourth quarter 2009 cash operating expenses were $23.4 million, or $2.06
per Mcfe produced, as compared to $26.4 million, or $1.99 per Mcfe
produced, in the fourth quarter of 2008. The increase in unit cash
operating expenses was primarily due to higher segment general and
administrative (G&A) expense and taxes other than income, partially
offset by lower lease operating expense, as discussed below:
o Lease operating expense decreased seven percent to $1.14 per Mcfe from
$1.22 per Mcfe primarily due to decreased overall service costs due to
lower commodity prices;
o Taxes other than income increased 17 percent to $0.34 per Mcfe from
$0.29 per Mcfe primarily due to the production decrease; and
o Segment G&A expense increased 20 percent to $0.59 per Mcfe as compared
to $0.49 per Mcfe primarily due to the production decrease and
additional costs related to an office relocation.
-- Exploration expense decreased 87 percent to $2.9 million in the fourth
quarter of 2009, as compared to $22.7 million in the prior year quarter,
due in part to a lack of exploratory drilling in the fourth quarter of
2009 and $13.9 million of charges in the prior year quarter for dry-hole
costs and a write-off of leasehold acquisition costs.
-- DD&A expense decreased by $10.2 million, or 25 percent, to $31.2
million, or $2.74 per Mcfe, in the fourth quarter of 2009 from $41.4
million, or $3.13 per Mcfe, in the prior year quarter. The overall
decrease in DD&A expense was primarily due to the production decrease
and a lower depletion rate per unit of production. The lower depletion
rate was primarily due to an impairment of Gulf Coast assets held for
sale (subsequently divested) during the third quarter of 2009 and
increasing contributions to production from the high-return Granite Wash
play.
During the fourth quarter of 2009, we incurred approximately $9.6 million of impairments. These charges were primarily related to Gulf Coast assets held for sale which were subsequently sold in January 2010.
Coal & Natural Resource Management and Natural Gas Midstream Segment Review (PVR and PVG)
As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG. A conversion of the GAAP-compliant financial statements ("As reported") to the equity method of accounting ("As adjusted") is included in the "Conversion to Non-GAAP Equity Method" table in this release. Using the equity method, PVG's results are reduced to a few line items and the results from oil and gas operations are therefore highlighted. We believe that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies. Financial and operational results and full-year 2010 guidance for each of PVR's segments are provided in the financial tables later in this release. In addition, operational updates for these segments are discussed in more detail in PVR's news release dated February 10, 2010. Please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release.
As previously announced, on February 19, 2010, PVG will pay to unitholders of record as of February 2, 2010 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit. The distribution remains unchanged from the distribution paid in the previous quarter. As a result of PVG's distribution, we will receive a cash distribution of $7.6 million in the first quarter of 2010, or $30.5 million on an annualized basis.
Capital Resources, Credit Facility and Impact of Derivatives
As of December 31, 2009, we had outstanding borrowings of $530.0 million ($498.4 million carrying value), consisting of $300 million ($291.7 million carrying value) of senior unsecured notes due 2016 and $230.0 million ($206.7 million carrying value) of convertible senior subordinated notes due 2012 and no borrowings against our revolving credit facility. The $32.0 million decrease in outstanding borrowings as compared to the $562.0 million at December 31, 2008 was primarily due to the repayment of revolver debt following a $64.9 million offering of PVA common shares in May 2009 and a $118.1 million offering of PVG common units in September 2009, as well as free cash flow during the second half of 2009, net of spending to fund our oil and gas capital expenditures. Currently, we have $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand.
As of December 31, 2009, PVR had outstanding borrowings of $620.1 million under its $800 million revolving credit facility with remaining revolver borrowing capacity of $178.3 million. The $52.0 million increase in outstanding PVR borrowings as compared to $568.1 million outstanding as of December 31, 2008 was primarily due to PVR capital expenditures during 2009. PVR's debt is non-recourse to PVA.
Consolidated interest expense increased from $14.0 million in the fourth quarter of 2008 to $18.6 million in the fourth quarter of 2009. The increase was due to a higher interest rate on the senior unsecured notes PVA issued in June 2009 and higher average level of outstanding borrowings during the fourth quarter of 2009 as compared to the prior year quarter.
Due to decreases in natural gas and crude oil prices experienced during the fourth quarter, the mark-to-market valuation of our and PVR's open hedging positions resulted in derivatives income of $3.4 million in the fourth quarter as compared to derivatives income of $51.0 million in the prior year quarter. Included in derivatives income for the fourth quarter of 2009 was $11.1 million of income related to our oil and gas segment and $7.7 million of expense related to PVR. Fourth quarter 2009 cash settlements of our oil and gas derivatives resulted in net cash receipts of $10.3 million, as compared to $5.8 million of net cash receipts in the same quarter of 2008. PVR's fourth quarter 2009 cash settlements of commodity and interest rate derivatives result in net cash payments of $1.1 million, as compared to $5.2 million of net cash payments in the same quarter of 2008.
Guidance for 2010
See the Guidance Table included in this release for guidance estimates for full-year 2010. These estimates, including capital expenditure plans, which were discussed in our operational update, are meant to provide guidance only and are subject to revision as our and PVR's operating environments change.
Full-Year and Fourth Quarter 2009 Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss fourth quarter 2009 financial and operational results, is scheduled for Thursday, February 11, 2010 at 3:00 p.m. ET. Prepared remarks by A. James Dearlove, President and Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call, or via webcast by logging on to our website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay of the call will be available for two weeks by dialing 1-888-203-1112 (international: 1-719-457-0820) and using the following replay code: 7649645. An on-demand replay of the conference call will be available for two weeks at our website.
Penn Virginia Corporation (NYSE: PVA) is an independent natural gas and oil company focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including East Texas, Mississippi, the Mid-Continent region and the Appalachian Basin. We also own approximately 51 percent of PVG, the owner of the general partner and the largest unit holder of PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business. For more information, please visit PVA's website at www.pennvirginia.com.
Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, NGLs, crude oil and coal; our ability to access external sources of capital; uncertainties relating to the occurrence and success of capital-raising transactions, including securities offerings and asset sales; reductions in the borrowing base under our Revolver; our ability to develop and replace oil and gas reserves and the price for which such reserves can be acquired; any impairment write-downs of our reserves or assets; reductions in our anticipated capital expenditures; the relationship between natural gas, NGL, crude oil and coal prices; the projected demand for and supply of natural gas, NGLs, crude oil and coal; the availability and costs of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; competition among producers in the oil and natural gas and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our oil and natural gas or PVR's coal differ from estimated proved oil and gas reserves and recoverable coal reserves; PVR's ability to generate sufficient cash from its businesses to maintain and pay the quarterly distribution to its general partner and its unitholders; the experience and financial condition of PVR's coal lessees and natural gas midstream customers, including the lessees' ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; whether the sale of our Gulf Coast assets closes during the fourth quarter and at the anticipated price; operating risks, including unanticipated geological problems, incidental to our business and to PVR's coal or natural gas midstream businesses; PVR's ability to acquire new coal reserves or natural gas midstream assets and new sources of natural gas supply and connections to third-party pipelines on satisfactory terms; PVR's ability to retain existing or acquire new natural gas midstream customers and coal lessees; the ability of PVR's lessees to produce sufficient quantities of coal on an economic basis from PVR's reserves and obtain favorable contracts for such production; the occurrence of unusual weather or operating conditions including force majeure events; delays in anticipated start-up dates of our oil and natural gas production, of PVR's lessees' mining operations and related coal infrastructure projects and new processing plants in PVR's natural gas midstream business; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us and by PVR or PVR's lessees; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial and credit markets) and political conditions (including the impact of potential terrorist attacks); PVG's ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its unitholders; uncertainties relating to our continued ownership of interests in PVG and PVR; and other risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
PENN VIRGINIA CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS - unaudited
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 (a) 2009 2008 (a)
Revenues
Natural gas $ 40,361 $ 73,165 $ 169,666 $ 368,801
Crude oil 11,846 9,087 43,258 46,529
Natural gas liquids 5,182 2,405 15,735 21,292
(NGLs)
Natural gas midstream 138,893 95,523 428,016 589,783
Coal royalties 29,987 33,923 120,435 122,834
Gain on sale of property 427 91 2,345 31,426
and equipment
Other 10,201 11,496 35,682 40,186
Total revenues 236,897 225,690 815,137 1,220,851
Expenses
Cost of midstream gas 105,275 76,374 333,854 484,621
purchased
Operating 20,249 23,238 86,766 89,891
Exploration 3,383 22,671 37,970 42,436
Exploration - drilling (530 ) - 19,784 -
rig standby charges - (b)
Taxes other than income 5,417 5,261 22,073 28,586
General and
administrative (excluding 19,793 17,313 67,274 66,612
equity compensation)
Equity-based compensation 1,420 2,175 12,726 7,882
- (c)
Depreciation, depletion 50,207 58,755 223,367 192,236
and amortization
Impairments on assets 9,500 - 97,400 -
held for sale
Impairments 1,598 51,764 10,526 51,764
Loss on sale of assets - - 1,599 -
Total expenses 216,312 257,551 913,339 964,028
Operating income (loss) 20,585 (31,861 ) (98,202 ) 256,823
Other income (expense)
Interest expense (18,552 ) (13,986 ) (68,884 ) (49,299 )
Derivatives 3,376 50,969 11,854 46,582
Other 338 116 2,612 (666 )
Income (loss) before
income taxes and 5,747 5,238 (152,620 ) 253,440
noncontrolling interests
Income tax benefit 5,665 2,432 75,252 (71,920 )
(expense)
Net income (loss) $ 11,412 $ 7,670 $ (77,368 ) $ 181,520
Less net income
attributable to (16,763 ) (8,184 ) (37,275 ) (60,436 )
noncontrolling interests
Income (loss) $ (5,351 ) $ (514 ) $ (114,643 ) $ 121,084
attributable to PVA
Income (loss) per share
attributable to PVA
Basic $ (0.12 ) $ (0.01 ) $ (2.62 ) $ 2.89
Diluted $ (0.12 ) $ (0.01 ) $ (2.62 ) $ 2.87
Weighted average shares 45,434 41,907 43,811 41,760
outstanding, basic
Weighted average shares 45,434 41,907 43,811 42,031
outstanding, diluted
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Production
Natural gas (MMcf) 9,480 11,624 43,338 41,493
Crude oil (MBbls) 162 175 750 506
NGLs (MBbls) 146 92 527 392
Total natural gas, crude
oil and NGL production 11,328 13,226 51,000 46,881
(MMcfe)
Prices
Natural gas ($ per Mcf) $ 4.26 $ 6.29 $ 3.91 $ 8.89
Crude oil ($ per Bbl) $ 73.12 $ 51.93 $ 57.68 $ 91.95
NGLs ($ per Bbl) $ 35.49 $ 26.14 $ 29.86 $ 54.32
(a) As a result of adopting accounting guidance for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), we are required to present our results of operations retrospectively as if the standard had been in effect for all periods presented. (b) Drilling rig standby charges represent fees paid in connection with the deferral of drilling associated with contractually committed rigs and frac tank rentals. (c) Our equity-based compensation expense includes our stock option expense and the amortization of restricted stock and restricted stock units related to employee awards in accordance with accounting guidance of share-based payments.
PENN VIRGINIA CORPORATION
CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
December 31, December 31,
2009 2008
Assets
Current assets $ 306,542 $ 263,518
Net property and equipment 2,352,358 2,512,177
Other assets 236,907 220,870
Total assets $ 2,895,807 $ 2,996,565
Liabilities and shareholders' equity
Current liabilities $ 160,835 $ 247,594
Long-term debt of PVR 620,100 568,100
Revolving credit facility - 332,000
Senior notes 291,749 -
Convertible notes 206,678 199,896
Other liabilities and deferred taxes 264,558 312,645
PVA shareholders' equity 1,021,976 1,039,103
Noncontrolling interests 329,911 297,227
Total shareholders' equity 1,351,887 1,336,330
Total liabilities and shareholders' equity $ 2,895,807 $ 2,996,565
CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Cash flows from operating
activities
Net income (loss) $ 11,412 $ 7,670 $ (77,368 ) $ 181,520
Adjustments to reconcile
net income (loss) to net
cash provided by
operating activities:
Depreciation, depletion 50,207 58,755 223,367 192,236
and amortization
Impairments 11,098 51,764 107,926 51,764
Derivative contracts:
Total derivative losses (2,512 ) (49,618 ) (5,333 ) (41,102 )
(gains)
Cash receipts (payments) 9,211 654 61,147 (46,086 )
to settle derivatives
Deferred income taxes (12,496 ) (1,554 ) (83,224 ) 58,551
Dry hole and unproved 2,802 20,855 33,278 35,847
leasehold expense
Other 4,660 7,214 20,724 (18,904 )
Operating cash flow (see
attached table
"Certain Non-GAAP 74,382 95,740 280,517 413,826
Financial Measures")
Changes in operating (20,458 ) 11,347 (4,570 ) (30,052 )
assets and liabilities
Net cash provided by 53,924 107,087 275,947 383,774
operating activities
Cash flows from investing
activities
Acquisitions (8,633 ) (15,562 ) (46,894 ) (293,747 )
Additions to property and (20,901 ) (193,308 ) (239,459 ) (585,339 )
equipment
Other 7,543 (435 ) 16,241 33,519
Net cash used in (21,991 ) (209,305 ) (270,112 ) (845,567 )
investing activities
Cash flows from financing
activities
Dividends paid (2,558 ) (2,361 ) (9,836 ) (9,398 )
Distributions paid to
noncontrolling interest (22,806 ) (18,416 ) (78,171 ) (64,245 )
holders
Proceeds from (repayments - (38,889 ) (7,542 ) 7,542
of) bank borrowings
Net proceeds from
(repayments of) PVA - 152,000 (332,000 ) 210,000
borrowings
Net proceeds from PVR (8,000 ) 10,000 52,000 156,000
borrowings
Net proceeds from
issuance of PVA senior - - 291,009 -
notes
Net proceeds from
issuance of PVR partners' - - - 138,141
capital
Net proceeds from sale of - - 118,080 -
PVG units
Net proceeds from - - 64,835 -
issuance of PVA equity
Other (5,272 ) (785 ) (24,217 ) 7,564
Net cash provided by (38,636 ) 101,549 74,158 445,604
financing activities
Net increase (decrease)
in cash and cash (6,703 ) (669 ) 79,993 (16,189 )
equivalents
Cash and cash equivalents 105,034 19,007 18,338 34,527
- beginning of period
Cash and cash equivalents $ 98,331 $ 18,338 $ 98,331 $ 18,338
- end of period
PENN VIRGINIA CORPORATION
QUARTERLY SEGMENT INFORMATION - unaudited
(in thousands except where noted)
Three months
ended December Oil and Gas
31, 2009 Coal and
Natural Natural Gas Eliminations Consolidated
Resource Midstream and Other
Amount per Mcfe Management
(a)
Production
Total natural
gas, crude oil 11,328
and NGLs
(MMcfe)
Natural gas 9,480
(MMcf)
Crude oil 162
(MBbls)
NGLs (MBbls) 146
Coal royalty
tons 8,456
(thousands of
tons)
Midstream
system 27,902
throughput
volumes (MMcf)
Revenues
Natural gas $ 40,361 $ 4.26 $ - $ - $ - $ 40,361
Crude oil 11,846 73.12 - - - 11,846
NGLs 5,182 35.49 - - - 5,182
Natural gas - - 155,907 (17,014 ) 138,893
midstream
Coal royalties - 29,987 - - 29,987
Gain on sale
of property 427 - - - 427
and equipment
Other 1,176 6,038 2,969 18 10,201
Total revenues 58,992 5.21 36,025 158,876 (16,996 ) 236,897
Expenses
Cost of
midstream gas - - 121,454 (16,179 ) 105,275
purchased
Operating 12,911 1.14 2,080 6,093 (835 ) 20,249
expense
Exploration 3,383 0.30 - - - 3,383
Exploration -
drilling rig (530 ) (0.05 ) - - - (530 )
standby
charges
Taxes other 3,800 0.34 558 1,028 31 5,417
than income
General and 6,655 0.59 3,107 3,640 7,811 21,213
administrative
Depreciation,
depletion and 31,187 2.74 7,773 10,491 756 50,207
amortization
Impairments on
assets held 9,500 0.84 - - - 9,500
for sale
Impairments 87 0.01 1,511 - - 1,598
Total expenses 66,993 5.91 15,029 142,706 (8,416 ) 216,312
Operating $ (8,001 ) $ (0.70 ) $ 20,996 $ 16,170 $ (8,580 ) $ 20,585
income (loss)
Additions to
property and $ 21,805 $ 206 $ 7,180 $ 343 $ 29,534
equipment
Three months
ended December Oil and Gas
31, 2008 Coal and
Natural Natural Gas Eliminations Consolidated
Resource Midstream and Other
Amount per Mcfe Management
(a)
Production
Total natural
gas, crude oil 13,226
and NGLs
(MMcfe)
Natural gas 11,624
(MMcf)
Crude oil 175
(MBbls)
NGLs (MBbls) 92
Coal royalty
tons 8,715
(thousands of
tons)
Midstream
system 29,786
throughput
volumes (MMcf)
Revenues
Natural gas $ 73,165 $ 6.29 $ - $ - $ - $ 73,165
Crude oil 9,087 51.93 - - - 9,087
NGLs 2,405 26.14 - - - 2,405
Natural gas - - 118,875 (23,352 ) 95,523
midstream
Coal royalties - 33,923 - - 33,923
Gain on sale
of property 91 - - - 91
and equipment
Other 1,191 8,394 1,793 118 11,496
Total revenues 85,939 6.50 42,317 120,668 (23,234 ) 225,690
Expenses
Cost of
midstream gas - - 98,752 (22,378 ) 76,374
purchased
Operating 16,089 1.22 2,418 5,706 (975 ) 23,238
expense
Exploration 22,671 1.71 - - - 22,671
Taxes other 3,856 0.29 565 676 164 5,261
than income
General and 6,415 0.49 2,826 3,741 6,506 19,488
administrative
Depreciation,
depletion and 41,427 3.13 8,072 8,772 484 58,755
amortization
Impairments 19,963 1.51 - 31,801 - 51,764
Total expenses 110,421 8.35 13,881 149,448 (16,199 ) 257,551
Operating $ (24,482 ) $ (1.85 ) $ 28,436 $ (28,780 ) $ (7,035 ) $ (31,861 )
income (loss)
Additions to
property and $ 184,246 $ 2,084 $ 22,011 $ 529 $ 208,870
equipment
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
PENN VIRGINIA CORPORATION
YEAR-TO-DATE SEGMENT INFORMATION - unaudited
(in thousands except where noted)
Year ended
December 31, Oil and Gas
2009 Coal and Natural
Natural Gas Eliminations Consolidated
Resource Midstream and Other
Amount per Mcfe Management
(a)
Production
Total natural
gas, crude oil 51,000
and NGLs
(MMcfe)
Natural gas 43,338
(MMcf)
Crude oil 750
(MBbls)
NGLs (MBbls) 527
Coal royalty
tons 34,330
(thousands of
tons)
Midstream
system 121,335
throughput
volumes (MMcf)
Revenues
Natural gas $ 169,666 $ 3.91 $ - $ - $ - $ 169,666
Crude oil 43,258 57.68 - - - 43,258
NGLs 15,735 29.86 - - - 15,735
Natural gas - - 504,789 (76,773 ) 428,016
midstream
Coal royalties - 120,435 - - 120,435
Gain on sale
of property 2,345 - - - 2,345
and equipment
Other 4,080 24,165 7,315 122 35,682
Total revenues 235,084 4.61 144,600 512,104 (76,651 ) 815,137
Expenses
Cost of
midstream gas - - 406,583 (72,729 ) 333,854
purchased
Operating 55,699 1.09 8,660 26,451 (4,044 ) 86,766
expense
Exploration 37,970 0.74 - - - 37,970
Exploration -
drilling rig 19,784 0.39 - - - 19,784
standby
charges
Taxes other 16,556 0.32 1,704 3,090 723 22,073
than income
General and 22,625 0.44 13,867 16,301 27,207 80,000
administrative
Depreciation,
depletion and 150,429 2.96 31,330 38,905 2,703 223,367
amortization
Impairments on
assets held 97,400 1.91 - - - 97,400
for sale
Impairments 9,015 0.18 1,511 - - 10,526
Loss on sale 1,599 0.03 - - - 1,599
of assets
Total expenses 411,077 8.06 57,072 491,330 (46,140 ) 913,339
Operating $ (175,993 ) $ (3.45 ) $ 87,528 $ 20,774 $ (30,511 ) $ (98,202 )
income (loss)
Additions to
property and $ 203,678 $ 2,252 $ 78,425 $ 1,998 $ 286,353
equipment
Year ended
December 31, Oil and Gas
2008 Coal and Natural
Natural Gas Eliminations Consolidated
Resource Midstream and Other
Amount per Mcfe Management
(a)
Production
Total natural
gas, crude oil 46,881
and NGLs
(MMcfe)
Natural gas 41,493
(MMcf)
Crude oil 506
(MBbls)
NGLs (MBbls) 392
Coal royalty
tons 33,690
(thousands of
tons)
Midstream
system 98,683
throughput
volumes (MMcf)
Revenues
Natural gas $ 368,801 $ 8.89 $ - $ - $ - $ 368,801
Crude oil 46,529 91.95 - - - 46,529
NGLs 21,292 54.32 - - - 21,292
Natural gas - - 720,002 (130,219 ) 589,783
midstream
Coal royalties - 122,834 - - 122,834
Gain on sale
of property 30,634 792 - - 31,426
and equipment
Other 2,074 29,701 8,251 160 40,186
Total revenues 469,330 10.01 153,327 728,253 (130,059 ) 1,220,851
Expenses
Cost of
midstream gas - - 612,530 (127,909 ) 484,621
purchased
Operating 59,459 1.27 11,940 20,737 (2,245 ) 89,891
expense
Exploration 42,436 0.91 - - - 42,436
Taxes other 23,336 0.50 1,680 2,578 992 28,586
than income
General and 21,284 0.45 12,606 14,300 26,304 74,494
administrative
Depreciation,
depletion and 132,276 2.82 30,805 27,361 1,794 192,236
amortization
Impairments 19,963 0.43 - 31,801 - 51,764
Total expenses 298,754 6.37 57,031 709,307 (101,064 ) 964,028
Operating $ 170,576 $ 3.64 $ 96,296 $ 18,946 $ (28,995 ) $ 256,823
income (loss)
Additions to
property and $ 607,220 $ 27,270 $ 304,758 $ (60,162 ) $ 879,086
equipment
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
PENN VIRGINIA CORPORATION
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
2009 2008 2009 2008
Reconciliation of GAAP "Net
cash provided by operating
activities" to Non-GAAP
"Operating cash flow"
Net cash provided by $ 53,924 $ 107,087 $ 275,947 $ 383,774
operating activities
Adjustments:
Changes in operating assets 20,458 (11,347 ) 4,570 30,052
and liabilities
Operating cash flow (a) $ 74,382 $ 95,740 $ 280,517 $ 413,826
Reconciliation of GAAP "Net
income (loss) attributable
to PVA" to Non-GAAP "Net
income (loss) attributable
to PVA, as adjusted"
Net income (loss) $ (5,351 ) $ (514 ) $ (114,643 ) $ 121,084
attributable to PVA
Adjustments for derivatives:
Derivative losses (gains) (2,512 ) (49,618 ) (5,333 ) (41,102 )
included in income
Cash receipts (payments) to 9,211 654 61,147 (46,086 )
settle derivatives
Adjustment for drilling rig (530 ) - 19,784 -
standby charges
Adjustment for impairments 11,098 51,764 107,926 51,764
Adjustment for net gains on (427 ) (91 ) (746 ) (31,426 )
sale of assets
Impact of adjustments on (6,629 ) (3,033 ) (16,123 ) 10,616
noncontrolling interests
Impact of adjustments on (5,183 ) 11,616 (66,042 ) 20,955
income taxes
$ (323 ) $ 10,778 $ (14,030 ) $ 85,805
Less: Portion of subsidiary
net income (loss) allocated
to undistributed share-based (42 ) (40 ) (116 ) (295 )
compensation awards, net of
taxes
Net income (loss)
attributable to PVA, as $ (365 ) $ 10,738 $ (14,146 ) $ 85,510
adjusted (b)
Net income (loss)
attributable to PVA, as $ (0.01 ) $ 0.26 $ (0.32 ) $ 2.03
adjusted, per share, diluted
(a) Operating cash flow represents net cash provided by operating activities before changes in operating assets and liabilities. We believe that operating cash flow is widely accepted as a financial indicator of an energy company's ability to generate cash which is used to internally fund investing activities, service debt and pay dividends. Operating cash flow is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the energy industry. Operating cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP. Operating cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income. (b) Net income (loss) attributable to PVA as adjusted represents net income (loss) attributable to PVA adjusted to exclude the effects of non-cash changes in the fair value of derivatives, drilling rig standby charges, impairments, gains and losses on the sale of assets and net income of PVR allocated to unvested PVR restricted units awarded as equity compensation that we hold until vesting. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry, as well as companies within the natural gas midstream industry. We use this information for comparative purposes within these industries. Net income (loss) attributable to PVA, as adjusted, is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income attributable to PVA.
PENN VIRGINIA CORPORATION
CONVERSION TO NON-GAAP EQUITY METHOD - unaudited
(in thousands)
Reconciliation of GAAP "Income Statements As Reported" to Non-GAAP "Income Statements, as
Adjusted" (a):
Three months ended December 31, 2009 Three months ended December 31, 2008
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Revenues
Natural gas $ 40,361 $ - $ 40,361 $ 73,165 $ - $ 73,165
Crude oil 11,846 - 11,846 9,087 - 9,087
NGLs 5,182 - 5,182 2,405 - 2,405
Natural gas 138,893 (138,893 ) - 95,523 (95,523 ) -
midstream
Coal royalties 29,987 (29,987 ) - 33,923 (33,923 ) -
Other 10,628 (9,007 ) 1,621 11,587 (10,187 ) 1,400
Total revenues 236,897 (177,887 ) 59,010 225,690 (139,633 ) 86,057
Expenses
Cost of
midstream gas 105,275 (105,275 ) - 76,374 (76,374 ) -
purchased
Operating 20,249 (8,173 ) 12,076 23,238 (7,150 ) 16,088
Exploration 3,383 - 3,383 22,671 - 22,671
Exploration -
drilling rig (530 ) - (530 ) - - -
standby
charges
Taxes other 5,417 (1,586 ) 3,831 5,261 (1,241 ) 4,020
than income
General and 21,213 (7,146 ) 14,067 19,488 (6,919 ) 12,569
administrative
Depreciation,
depletion and 50,207 (18,264 ) 31,943 58,755 (16,844 ) 41,911
amortization
Impairments on
assets held 9,500 - 9,500 - - -
for sale
Impairments 1,598 (1,511 ) 87 51,764 (31,801 ) 19,963
Loss on sale - - - - - -
of assets
Total expenses 216,312 (141,955 ) 74,357 257,551 (140,329 ) 117,222
Operating 20,585 (35,932 ) (15,347 ) (31,861 ) 696 (31,165 )
income (loss)
Other income
(expense)
Interest (18,552 ) 6,167 (12,385 ) (13,986 ) 7,306 (6,680 )
expense
Derivatives 3,376 7,709 11,085 50,969 (23,261 ) 27,708
Equity
earnings in - 5,626 5,626 - 7,408 7,408
PVG and PVR
Other 338 (333 ) 5 116 (333 ) (217 )
Income (loss)
before taxes
and 5,747 (16,763 ) (11,016 ) 5,238 (8,184 ) (2,946 )
noncontrolling
interests
Income tax
benefit 5,665 - 5,665 2,432 - 2,432
(expense)
Net income 11,412 (16,763 ) (5,351 ) 7,670 (8,184 ) (514 )
(loss)
Less net
income
attributable (16,763 ) 16,763 - (8,184 ) 8,184 -
to
noncontrolling
interests
Net income
(loss) $ (5,351 ) $ - $ (5,351 ) $ (514 ) $ - $ (514 )
attributable
to PVA
Year ended December 31, 2009 Year ended December 31, 2008
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Revenues
Natural gas $ 169,666 $ - $ 169,666 $ 368,801 $ - $ 368,801
Crude oil 43,258 - 43,258 46,529 - 46,529
NGLs 15,735 - 15,735 21,292 - 21,292
Natural gas 428,016 (428,016 ) - 589,783 (589,783 ) -
midstream
Coal royalties 120,435 (120,435 ) - 122,834 (122,834 ) -
Other 38,027 (31,480 ) 6,547 71,612 (38,744 ) 32,868
Total revenues 815,137 (579,931 ) 235,206 1,220,851 (751,361 ) 469,490
Expenses
Cost of
midstream gas 333,854 (333,854 ) - 484,621 (484,621 ) -
purchased
Operating 86,766 (35,111 ) 51,655 89,891 (30,367 ) 59,524
Exploration 37,970 - 37,970 42,436 - 42,436
Exploration -
drilling rig 19,784 - 19,784 - - -
standby
charges
Taxes other 22,073 (4,794 ) 17,279 28,586 (4,258 ) 24,328
than income
General and 80,000 (32,545 ) 47,455 74,494 (28,976 ) 45,518
administrative
Depreciation,
depletion and 223,367 (70,235 ) 153,132 192,236 (58,166 ) 134,070
amortization
Impairments on
assets held 97,400 - 97,400 - - -
for sale
Impairments 10,526 (1,511 ) 9,015 51,764 (31,801 ) 19,963
Loss on sale 1,599 - 1,599 - - -
of assets
Total expenses 913,339 (478,050 ) 435,289 964,028 (638,189 ) 325,839
Operating (98,202 ) (101,881 ) (200,083 ) 256,823 (113,172 ) 143,651
income (loss)
Other income
(expense)
Interest (68,884 ) 24,653 (44,231 ) (49,299 ) 24,672 (24,627 )
expense
Derivatives 11,854 19,714 31,568 46,582 (16,837 ) 29,745
Equity
earnings in - 21,592 21,592 - 42,162 42,162
PVG and PVR
Other 2,612 (1,353 ) 1,259 (666 ) 2,739 2,073
Income (loss)
before taxes
and (152,620 ) (37,275 ) (189,895 ) 253,440 (60,436 ) 193,004
noncontrolling
interests
Income tax
benefit 75,252 - 75,252 (71,920 ) - (71,920 )
(expense)
Net income (77,368 ) (37,275 ) (114,643 ) 181,520 (60,436 ) 121,084
(loss)
Less net
income
attributable (37,275 ) 37,275 - (60,436 ) 60,436 -
to
noncontrolling
interests
Net income
(loss) $ (114,643 ) $ - $ (114,643 ) $ 121,084 $ - $ 121,084
attributable
to PVA
(a) Equity method income statements represent consolidated income statements, minus 100% of PVG's consolidated results of operations, plus noncontrolling interest which represents the portion of PVG's consolidated results of operations that we do not own. We believe equity method income statements provide useful information to allow the public to more easily discern PVG's effect on our operations.
PENN VIRGINIA CORPORATION
CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (continued)
(in thousands)
Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP "Balance Sheet, as Adjusted" (a):
December 31, 2009 December 31, 2008
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Assets
Current assets $ 306,542 $ (107,782 ) $ 198,760 $ 263,518 $ (126,299 ) $ 137,219
Net property and 2,352,358 (900,844 ) 1,451,514 2,512,177 (895,119 ) 1,617,058
equipment
Equity investment in - 155,692 155,692 - 241,296 241,296
PVG and PVR
Other assets 236,907 (210,437 ) 26,470 220,870 (206,256 ) 14,614
Total assets $ 2,895,807 $ (1,063,371 ) $ 1,832,436 $ 2,996,565 $ (986,378 ) $ 2,010,187
Liabilities and
shareholders' equity
Current liabilities $ 160,835 $ (86,323 ) $ 74,512 $ 247,594 $ (89,908 ) $ 157,686
Long-term debt 1,118,527 (620,100 ) 498,427 1,099,996 (568,100 ) 531,896
Other liabilities and 264,558 (27,037 ) 237,521 312,645 (31,143 ) 281,502
deferred taxes
-
PVA shareholders' 1,021,976 - 1,021,976 1,039,103 - 1,039,103
equity
Noncontrolling 329,911 (329,911 ) - 297,227 (297,227 ) -
interests
Total shareholders' 1,351,887 (329,911 ) 1,021,976 1,336,330 (297,227 ) 1,039,103
equity
Total liabilities and $ 2,895,807 $ (1,063,371 ) $ 1,832,436 $ 2,996,565 $ (986,378 ) $ 2,010,187
shareholders' equity
Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-GAAP "Statement of Cash Flows, as Adjusted"
(b):
Three months ended December 31, 2009 Three months ended December 31, 2008
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Cash flows from
operating activities
Net income (loss) $ 11,412 $ - $ 11,412 $ 7,670 $ - $ 7,670
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation,
depletion and 50,207 (18,264 ) 31,943 58,755 (16,844 ) 41,911
amortization
Impairments 11,098 (1,511 ) 9,587 51,764 (31,801 ) 19,963
Derivative contracts:
Total derivative (2,512 ) (8,466 ) (10,978 ) (49,618 ) 21,909 (27,709 )
losses (gains)
Cash receipts
(payments) to settle 9,211 1,135 10,346 654 5,187 5,841
derivatives
Deferred income taxes (12,496 ) - (12,496 ) (1,554 ) - (1,554 )
Dry hole and unproved 2,802 - 2,802 20,855 - 20,855
leasehold expense
Investment in PVG and - (23,224 ) (23,224 ) - (15,592 ) (15,592 )
PVR
Cash distributions - 7,347 7,347 - 11,571 11,571
from PVG and PVR
Other 4,660 (1,357 ) 3,303 7,214 (2,631 ) 4,583
Operating cash flow 74,382 (44,340 ) 30,042 95,740 (28,201 ) 67,539
Changes in operating
assets and (20,458 ) 8,303 (12,155 ) 11,347 (4,299 ) 7,048
liabilities
Net cash provided by 53,924 (36,037 ) 17,887 107,087 (32,500 ) 74,587
operating activities
Net cash used in (21,991 ) 7,111 (14,880 ) (209,305 ) 24,753 (184,552 )
investing activities
-
Net cash provided by (38,636 ) 30,806 (7,830 ) 101,549 8,416 109,965
financing activities
Net increase
(decrease) in cash (6,703 ) 1,880 (4,823 ) (669 ) 669 -
and cash equivalents
Cash and cash
equivalents-beginning 105,034 (21,194 ) 83,840 19,007 (19,007 ) -
of period
Cash and cash
equivalents-end of $ 98,331 $ (19,314 ) $ 79,017 $ 18,338 $ (18,338 ) $ -
period
Year ended December 31, 2009 Year ended December 31, 2008
As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted
Cash flows from
operating activities
Net income (loss) $ (77,368 ) $ - $ (77,368 ) $ 181,520 $ - $ 181,520
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation,
depletion and 223,367 (70,235 ) 153,132 192,236 (58,166 ) 134,070
amortization
Impairments 107,926 (1,511 ) 106,415 51,764 (31,801 ) 19,963
Derivative contracts:
Total derivative (5,333 ) (22,700 ) (28,033 ) (41,102 ) 11,357 (29,745 )
losses (gains)
Cash settlements of 61,147 (3,000 ) 58,147 (46,086 ) 38,466 (7,620 )
derivatives
Deferred income taxes (83,224 ) - (83,224 ) 58,551 - 58,551
Dry hole and unproved 33,278 - 33,278 35,847 - 35,847
leasehold expense
Investment in PVG and - (62,911 ) (62,911 ) - (102,598 ) (102,598 )
PVR
Cash distributions - 42,279 42,279 - 44,018 44,018
from PVG and PVR
Other 20,724 (2,620 ) 18,104 (18,904 ) (1,421 ) (20,325 )
Operating cash flow 280,517 (120,698 ) 159,819 413,826 (100,145 ) 313,681
Changes in operating
assets and (4,570 ) 4,763 193 (30,052 ) 6,976 (23,076 )
liabilities
Net cash provided by 275,947 (115,935 ) 160,012 383,774 (93,169 ) 290,605
operating activities
Net cash used in (270,112 ) 79,530 (190,582 ) (845,567 ) 331,030 (514,537 )
investing activities
-
Net cash provided by 74,158 35,429 109,587 445,604 (225,696 ) 219,908
financing activities
Net increase
(decrease) in cash 79,993 (976 ) 79,017 (16,189 ) 12,165 (4,024 )
and cash equivalents
Cash and cash
equivalents-beginning 18,338 (18,338 ) - 34,527 (30,503 ) 4,024
of period
Cash and cash
equivalents-end of $ 98,331 $ (19,314 ) $ 79,017 $ 18,338 $ (18,338 ) $ -
period
(a) Equity method balance sheets represent consolidated balance sheets, minus 100% of PVG's consolidated balance sheets, excluding noncontrolling interests which represents the portion of PVG's consolidated balance sheet that we do not own and including other adjustments to eliminate inter-company transactions. We believe equity method balance sheets provide useful information to allow the public to more easily discern PVG's effect on our assets, liabilities and shareholders' equity. (b) Equity method statements of cash flows represent consolidated statements of cash flows, minus 100% of PVG's consolidated statements of cash flows, excluding noncontrolling interests which represents the portion of PVG's consolidated results of operations that we do not own and including other adjustments to eliminate inter-company transactions. We believe equity method statements of cash flows provide useful information to allow the public to more easily discern PVG's effect on our cash flows.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE - unaudited
(dollars in millions except where noted)
We are providing the following guidance regarding financial and operational
expectations for full-year 2010.
Actual
First Second Third Fourth YTD Full-Year
Oil & Gas Segment: Quarter Quarter Quarter Quarter 2009 2010 Guidance
2009 2009 2009 2009
Production:
Natural gas (Bcf) - 11.8 11.4 10.6 9.5 43.3 38.2 - 41.4
(a)
Crude oil (MBbls) - 171 215 202 162 750 900 - 975
(a)
NGLs (MBbls) 147 140 94 146 527 575 - 625
Equivalent 13.7 13.6 12.4 11.3 51.0 47.0 - 51.0
production (Bcfe)
Equivalent daily
production (MMcfe 152.3 149.5 134.9 123.1 139.7 128.8 - 139.7
per day)
Expenses:
Cash operating
expenses ($ per $ 1.80 1.79 1.82 2.06 1.86 1.95 - 2.10
Mcfe)
Exploration $ 21.3 17.5 16.1 2.8 57.7 40.0 - 50.0
Depreciation,
depletion and $ 2.92 2.94 3.17 2.74 2.96 3.00 - 3.10
amortization ($ per
Mcfe)
Impairments $ 1.2 3.3 92.4 9.6 106.4
Capital
expenditures:
Development drilling $ 76.5 37.3 8.3 18.1 140.2 250.0 - 275.0
Exploratory drilling $ 1.5 - 0.7 0.3 2.5 40.0 - 50.0
Pipeline, gathering, $ 5.1 2.4 0.9 1.0 9.4 7.0 - 8.0
facilities
Seismic $ 0.7 0.4 0.1 - 1.2 10.0 - 11.0
Lease acquisition,
field projects and $ 1.8 2.8 5.8 8.1 18.5 68.0 - 81.0
other
Total segment $ 85.6 42.9 15.8 27.5 171.8 375.0 - 425.0
capital expenditures
Coal and Natural
Resource Segment
(PVR):
Coal royalty tons 8.7 8.7 8.4 8.5 34.3 31.0 - 32.0
(millions)
Revenues:
Average coal $ 3.50 3.43 3.56 3.55 3.51 3.30 - 3.40
royalties per ton
Average coal
royalties per ton, $ 3.36 3.25 3.37 3.38 3.34 3.15 - 3.25
net of coal
royalties expense
Other $ 7.6 5.1 5.4 6.0 24.1 21.0 - 22.0
Expenses:
Cash operating $ 5.9 6.6 6.0 5.7 24.2 22.0 - 22.5
expenses
Depreciation,
depletion and $ 7.4 8.2 8.0 7.8 31.3 28.5 - 29.0
amortization
Capital
expenditures:
Expansion and $ 1.3 0.6 0.1 0.1 2.1 6.0 - 7.0
acquisitions
Other capital $ - - - 0.2 0.2 - - 0.5
expenditures
Total segment $ 1.3 0.6 0.1 0.3 2.3 6.0 - 7.5
capital expenditures
Natural Gas
Midstream Segment
(PVR):
System throughput
volumes (MMcf per 359 344 324 303 332 350 - 360
day) (b)
Expenses:
Cash operating $ 11.8 11.6 11.6 10.8 45.8 55.0 - 60.0
expenses
Depreciation,
depletion and $ 9.1 9.5 9.8 10.5 38.9 42.0 - 44.0
amortization
Capital
expenditures:
Expansion and $ 11.2 10.3 37.9 5.0 64.4 34.0 - 42.0
acquisitions
Other capital $ 3.3 1.4 1.4 2.3 8.4 16.0 - 18.0
expenditures
Total segment $ 14.5 11.7 39.3 7.3 72.8 50.0 - 60.0
capital expenditures
Corporate and Other:
General and
administrative $ 5.2 5.8 6.4 7.4 24.8 22.0 - 24.0
expense - PVA
General and
administrative $ 0.5 0.6 0.9 0.4 2.4 2.5 - 3.0
expense - PVG
Interest expense:
PVA end of period $ 591.5 564.3 496.3 498.4 498.4
debt outstanding
PVA average interest 4.3% 6.0% 9.8% 12.6% 8.2%
rate
PVR end of period $ 595.1 597.1 628.1 620.1 620.1
debt outstanding
PVR average interest 3.9% 4.2% 4.2% 3.9% 4.1%
rate
Income tax rate 38.8% 39.7% 38.7% 51.4% 39.6%
Cash distributions
received from PVG $ 11.5 11.6 11.5 7.6 42.2
and PVR
Other capital $ 0.6 0.9 0.2 0.3 2.0 1.5 - 2.0
expenditures
These estimates are meant to provide guidance only and are subject to change as
PVA's and PVR's operating environments change.
See Notes on
subsequent pages.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE - unaudited - (continued)
Notes to Guidance Table:
(a) The following table shows our current derivative positions in the oil and
gas segment as of December 31, 2009:
Weighted Average Price
Average Volume Additional Floor Ceiling
Per Day Put Option
Natural gas costless collars (MMBtu) ($ per MMBtu)
First quarter 2010 35,000 4.96 7.41
Second quarter 2010 30,000 5.33 8.02
Third quarter 2010 30,000 5.33 8.02
Fourth quarter 2010 50,000 5.65 8.77
First quarter 2011 50,000 5.65 8.77
Second quarter 2011 30,000 5.67 7.58
Third quarter 2011 30,000 5.67 7.58
Fourth quarter 2011 20,000 6.00 8.50
First quarter 2012 20,000 6.00 8.50
Natural gas three-way collars (1) (MMBtu) ($ per MMBtu)
First quarter 2010 30,000 6.83 9.50 13.60
Natural gas swaps (MMBtu) ($ per MMBtu)
First quarter 2010 15,000 6.19
Second quarter 2010 30,000 6.17
Third quarter 2010 30,000 6.17
Crude oil costless collars (barrels) ($ per barrel)
First quarter 2010 500 60.00 74.75
Second quarter 2010 500 60.00 74.75
Third quarter 2010 500 60.00 74.75
Fourth quarter 2010 500 60.00 74.75
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, oil and gas segment operating income for 2010 would increase or decrease by approximately $17.8 million. In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, oil and gas segment operating income for 2010 would increase or decrease by approximately $1.8 million. This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels. These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.
(1) A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The sold call establishes the maximum price that we will receive for the contracted commodity volumes. The purchased put establishes the minimum price that we will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the minimum price equals the reference price (i.e., NYMEX) plus the excess of the purchased put strike price over the sold put strike price.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE - unaudited - (continued)
The costless collar natural gas prices per MMBtu per quarter include the
(b) effects of basis differentials, if any. The following table shows current
derivative positions for natural gas production in PVR's natural gas
midstream segment as of December 31, 2009:
Average Swap Weighted Average Price
Volume
Per Day Price Put Call
Crude oil collar (barrels) ($ per barrel)
First quarter 2010 through 750 70.00 81.25
fourth quarter 2010
Crude oil collar (barrels) ($ per barrel)
First quarter 2010 through 1,000 68.00 80.00
fourth quarter 2010
Natural gas purchase swap (MMBtu) ($ per MMbtu)
First quarter 2010 through 5,000 5.815
fourth quarter 2010
NGL - natural gasoline (gallons) (per gallon)
collar
First quarter 2011 through 60,000 $1.55 $1.92
fourth quarter 2011
Crude oil collar (barrels) (per barrel)
First quarter 2011 through 400 $75.00 $98.50
fourth quarter 2011
Natural gas purchase swap (MMBtu) ($ per MMBtu)
First quarter 2011 through 3,000 6.430
fourth quarter 2011
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, natural gas midstream gross margin and operating income for 2010 would decrease or increase by approximately $6.9 million. In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, natural gas midstream gross margin and operating income for 2010 would increase or decrease by approximately $11.5 million. This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels. These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.
Source: Penn Virginia Corporation
Released February 10, 2010